Do you mean .wma? Then it gets converted to .aac. It takes a long time, but the audio quality is fine. But I agree the transfer is too much of a hassle for Ipod. But I don't use the App, I download from library and it goes into Itunes, then I plug in the Ipod.

It can only be converted if it's DRM-free, and the whole point of libraries using WMA is that it's a format that supports DRM.